SEMINAR CLASS: WORKSHEET 2 MICROECONOMICS Academic year 2023/2024 Elasticities. Question 1 a) A company sells mobile phones at 250, each day the company sells 380 units. If the price decreases by 25 the number of daily sales increases up to 500 units each day. What is the value of the price elasticity of demand? b) A company has hired an economist who based on available data suggests that price elasticity of demand for the main product the rm sells is -0.70. The current price is 120, selling 20,000 daily units worldwide. If the company increases the price up to 150, what are the new daily revenues? c) Consider that price elasticity of demand is -1.20. If the price increases by 5%, gure out the % change in revenues. d) Consider the following demand function Qd=2004p. Find the price elasticity when the price is 10 and when the price is 40. At which price and quantity do the rm maximizes its revenues? Question 2 A market is at equilibrium when the price is20, at this price the equilibrium output is 1000 units. Knowing that price demand elasticity is -1.70 and price elasticity of supply is 1.5, gure out the excess of demand or supply if the new price is 25. Question 3 The market for pizzas in a small town in the south of France, close to Toulouse, can be represented through the following demand and supply functions: Qd = 90 41' Q5 = 10 + 1p The quantity is expressed in pizzas sold daily and the price in Euros. Find the market equilibrium and represent Demand and Supply using an appropriate diagram. Figure out the price elasticity of demand if the price changes from 20 to 40. Figure out the price elasticity of supply if the price changes from 20 to 340. Figure out a mathematicl expression for the price elasticity of demand that only depends on the price. Question 4 Imagine that we know the following facts about one particular brand of beer, Heineken. The price elasticity of demand is -0.8. The cross-price elasticity to the price of Coronita is 0.85. The income elasticity is 0.6. The cross price elasticity to the price of Hotdogs is -0.5 a) If you are are the product manager of Heineken, What is the expected change (as a 96 of the current output) if at the same time: Coronita increases the price by 10% The level of income of your customers have decreased by 5%. Hotdogs are more expensive than they use to be, their price has increases by 25%. b) If the Heineken company wants to keep the level of output, what is the needed change in price to keep the level of consumption at the same level? Question 5 The market for a particular product has the following demand and supply functions: Qd = 1700 5p Q5 = 200 + 1019 a) Find the market equilibrium, quantity and price, and the corresponding level of welfare. b) If the government decides to set a ceiling price of-70 nd the new level of welfare. c) Does the consumer welfare change depend on price elasticity of supply? Question 6 a) If for a certain labour market: Ld= 200 - 3w Ls=2w Find the market equilibrium: the price and the quantity. Imagine that the government sets a minium wage, the legal minimum wage is now 60.Find the level of unemployment and the welfare for companies